AI and investing
Prospero.ai’s app can democratise investing
As young people increasingly turn to social media for readily available financial advice, there are concerns that, without adequate knowledge, individuals may follow investing trends that are not underpinned by valid data. GlobalData Thematic reporter, Kris Cooper, spoke to Prospero.ai’s CEO, George Kailas, about the company’s solution for trusted investing advice.
Last year, research from Deloitte found that 25% of 18-25 year old banking customers use social media for financial guidance, with one in five in this age group stating that they had invested money based on social media recommendations. Despite this, 33% of this age group are not confident enough in their financial knowledge to take out investment products.
Other data shows that 80% of institutional investors also use social media as part of their regular workflow, with 30% stating that information gathered on social media has influenced an investment decision.
One company that is aiming to democratise access to validated market signals and investing advice is Prospero.ai, an app that serves as an AI research desk.
Company CEO George Kailas explains that, while there is a lot of valuable information online, “it’s very hard for people to vet just how much someone knows about finance or what their training might have been, as well as their intentions.”
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Emma Taylor
Senior Analyst in GlobalData's Thematic Intelligence Team specialising in disruptive technologies.
Social media for investing advice
Increasingly, younger generations are utilising platforms such as Reddit, eToro, Instagram and TikTok to inform their investment decisions.
Kailas suggests that this follows a wider trend of people shifting away from trusting institutions to trusting individuals instead. While Kailas acknowledges that platforms like Reddit do contain some valuable investing advice and figures, people need to understand the figures they are seeing.
"I think the best advice that I have for people is that you can go with your instincts on who you trust, but you should really make sure your information passes the smell test, whether that be the person or the company having some kind of financial experience that you can verify, or on the AI side,” he says.
Democratising access to financial information
Prospero.ai’s proprietary AI system aggregates and simplifies stock analysis into 10 key signals. This is aimed at helping users to determine what is going on in the markets and make accurate predictions and investments on the back of this.
Developed over 13 years with joint intellectual property from NYU, the system aims to make investing easy to understand, delivering it in a “bite-sized” manner. With signals spanning profitability, growth, market similarity, institutional flow, net options, sentiment, short pressure, dark pool ratings and net option centres, Kailas believes that “it is simplified, but it's also a good level of complexity to paint a full picture and tell the story”.
He refers to the signal numbers as “icebergs”. While there is one number for the viewer to consider, it is an aggregate of a variety of data and assessments from AI algorithms.
Integrated into Prospero.ai’s upside and downside signals are price targets, analyst readings, upgrades, downgrades and price momentum that inform the overall number.
Kailas emphasises, that it’s important to meet people where they are, so the variety of signals helps users to understand in cases of meme stocks, such as the previous hype around GameStop, that short-term social sentiment may be high but that it might be better to own a company that has long term profitability, among other factors.
He adds that considering all ten signals is a “better way to teach, communicate and meet people where they are”, acknowledging that “it’s not perfect, it’s not an oracle, it’s not right every time”, but arguing that it enables users to make more informed decisions and understand risk better.
Also accompanying the Prospero.ai app is an investing newsletter, written by Kailas, which teaches users how to use the app and build up their long-term knowledge of markets.
It is Kailas’ hope that, with the system providing access to good quality data and his newsletter teaching people how to decipher the signals, the investing world can become more equitable, with people being able to trust the data and make their own investment decisions, rather than relying on individuals on social media who cannot be validated.